Over the first quarter of 2024, many economies around the world performed well. As a result, stock markets rose as investors felt more confident in the prospect of imminent interest rate cuts.

Whilst this article focuses in the main on March 2024 market news, there are references to events and market performance from previous months.

US

In Q4 of 2023, the US economy grew more quickly than anticipated, comfortably avoiding the recession that some had predicted¹. Gross Domestic Product (GDP) increased by 3.3% year-on-year, above economists’ prediction that the economy would grow by 2%². Manufacturing also grew for the first time in one and a half years. The Purchasing Managers’ Index was 50.3 in March; a score of 50 or above suggests growth while a score below 50 suggests contraction in the sector³.

In addition to economic growth, inflation also provided welcome data. The Personal Consumption Expenditures index rose by 2.7% year-on-year, down from 5.9% at the same time last year⁴.

The economic data buoyed investor sentiment. As of 1 April 2024, the S&P 500 was up by 10.6% for the year-to-date⁵. The Nasdaq rose by 9.1% and the Dow Jones rose by 5.6%⁶.

UK

After falling into a technical recession in Q4 of 2023, the UK economy returned to growth at the start of 2024 as GDP grew by 0.2% in January⁷. Inflation also continued to fall, dropping to 3.4% in February from 4% in January⁸.

The chancellor of the Exchequer delivered his Spring Budget in March, announcing further tax cuts on top of those announced in the Autumn Statement in 2023. The main rate of National Insurance fell by a further 2%, and the higher rate of Capital Gains Tax for residential property will fall by 4%, both coming into force from 6 April 2024. The government also announced that it intends to reform the High Income Child Benefit Charge⁹.

The FTSE 100 ended the quarter up by 3%, a positive return but significantly behind its peers in the US¹⁰. Similarly, the FTSE All-Share closed the quarter up 3.6%¹¹.

Europe

Inflation fell unexpectedly in the eurozone in March, from 2.6% to 2.4%, though economists had expected a flat reading from month to month¹². The data comes ahead of the European Central Bank’s (ECB) April meeting, though the central bank is likely to hold rates steady despite inflation falling closer to their 2% target ahead of schedule¹³.

Despite economic challenges, European stocks have performed well so far in 2024. As of 28 March, the Stoxx Europe 600 index has risen by 12% since the beginning of the year, the German Dax index has risen by 8%, and the French CAC 40 has risen by 11%¹⁴.

Cheap valuations in European stock markets could be behind the rising popularity of these indexes for investors, as well as the prospect of future interest rate cuts by the ECB and anticipated economic recovery across the bloc¹⁵.

Investors may also be interested in diversifying their investments with European stocks because of the high market concentration in the US caused by the performance of the Magnificent Seven¹⁶.

Asia

The best-performing index of the quarter by a significant margin was the Japan TOPIX, returning 18.1%¹⁷. The index soared despite the Bank of Japan ending its 8-year negative interest rate policy by raising rates to 0-0.1% in March¹⁸.

Chinese stocks in Hong Kong’s Hang Seng index are down by 14% year-on-year¹⁹ . However, improved economic performance following the Lunar New Year as well as the People’s Bank of China lowering the 5-year loan prime rate boosted investor sentiment, and the MSCI China Index rose by 12.3%²⁰ .

What this means for you

The first quarter of the year has delivered a surprising amount of growth for many major economies. Stock markets, for the most part, seem to be following suit.

You might have noticed lots of articles predicting what might happen next for economies and stock markets, as these are particularly popular at the start of the year. But, as you can see from the unexpected drops in inflation and stock market returns, it’s impossible to predict what could happen next with accuracy.

That’s why it’s usually sensible to base your investment decisions on your personal circumstances, goals, and attitude to risk rather than any kind of prediction or expectation about what could happen next on the stock market.

By taking a bespoke approach to your portfolio, you can be confident that your investments are the most suitable ones for you, giving you the opportunity to grow your wealth and achieve your long-term goals, regardless of what the financial headlines might be telling you.

Please note: This guide is for general information only and does not constitute advice. The information is aimed at retail clients only.

The content of this guide was accurate at the time of writing. While information is considered to be true and correct at the date of publication, changes in circumstances, regulation, and legislation after the time of publication may affect the accuracy of the guide.

Sources:

^{1 25.01.2024 |The U.S. economy grew at blistering 3.3% pace in Q4 while inflation pulled back| CNBC
2 25.01.2024 | The U.S. economy grew at blistering 3.3% pace in Q4 while inflation pulled back | CNBC
3 01.04.2024 | US manufacturing on the mend; rising raw material prices pose obstacle | Reuters
4 25.01.2024 | The U.S. economy grew at blistering 3.3% pace in Q4 while inflation pulled back |CNBC
5 02.04.2024 | This week in the markets: UK shares helped by brighter economic news |Fidelity
6 28.03.2024 | S&P 500 closes at a fresh record, posts strongest first-quarter performance since 2019: Live updates CNBC
7 13.03.2024 | UK economy returns to modest growth at start of 2024 |Reuters
8 20.03.2024 | Consumer price inflation, UK: February 2024 |Office for National Statistics
9 06.03.2024 | Spring Budget 2024 |Gov.uk
10 28.03.2024 | LONDON MARKET CLOSE: FTSE 100 closes higher at end of first quarter |Morningstar
11 02.04.2024 | Review of Markets over the first quarter of 2024 |J. P. Morgan
12 03.04.2024 | Eurozone Inflation Falls Again in March| Morningstar
13 03.04.2024 | Eurozone Inflation Falls Again in March| Morningstar
14 28.03.2024 | Why European Stocks Keep Rising | IG
15 28.03.2024 | Why European Stocks Keep Rising |IG
16 02.04.2024 | Review of Markets over the first quarter of 2024 |J. P. Morgan
17 02.04.2024 | Review of Markets over the first quarter of 2024 |J. P. Morgan
18 22.03.2024 | Bank of Japan ends negative interest rate era, and other economic stories to read this week| World Economic Forum
19 12.03.2024 | China’s stock valuations are ‘way too low,’ strategist says — here’s why |CNBC
20 02.04.2024 | Review of Markets over the first quarter of 2024 |J. P. Morgan}

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